IMF says RI budget should be expanded<\/p>\n
JAKARTA (JP): Indonesia's revised state budget agreed with the
\nInternational Monetary Fund (IMF) in January has to be expanded
\nfurther to accommodate bigger spending on social welfare
\nprograms, IMF Asia Pacific director Hubert Neiss said yesterday.<\/p>\n
Speaking to journalists after a luncheon with President B.J.
\nHabibie and economic ministers at the State Guest House, Neiss
\nsaid the budget had suffered a large deficit as a result of
\nswelling expenditure.<\/p>\n
\"We have to accommodate a larger amount of expenditure for
\nsocially related purposes, not only for subsidies but also for
\nmedical purposes and education.<\/p>\n
\"And we have to deal with the problems of a larger deficit
\nwhich if it gets too large and out of hand, ... results in higher
\ninflation.\"<\/p>\n
Neiss projected that the revenue side of the budget would be
\nsmaller than previously assumed because of the deepening
\nrecession.<\/p>\n
The current budget, balanced by law, is set at Rp 147.22
\ntrillion (US$12.2 billion). This is a nominal increase of 45.6
\npercent over the 1997\/1998 budget ending March 31.<\/p>\n
Neiss, who arrived Wednesday afternoon, is expected to be in
\nthe capital for three weeks. He is leading an IMF technical team
\nreviewing the country's economic reform programs before the IMF
\nboard of directors makes a decision whether to disburse another
\nUS$1 billion of the $10 billion bailout money committed by the
\nfund for Indonesia.<\/p>\n
Indonesia has already received $4 billion from the IMF.<\/p>\n
In addition to the budget, Neiss is going to review
\nmacroeconomic assumptions, monetary policy and financial
\nrestructuring.<\/p>\n
Based on macroeconomic assumptions revised last April,
\nIndonesia's economic growth was projected to contract 4 percent
\nthis year, inflation to rise 45 percent and the rupiah to
\nstabilize at Rp 6,000 per U.S. dollar.<\/p>\n
However, the Central Bureau of Statistics projected recently
\nthat gross domestic product would contract 10 percent and
\ninflation would rise 80 percent. The rupiah is currently being
\ntraded at less than 13,500 against the dollar.<\/p>\n
Neiss said a revision of macroeconomic assumptions was needed
\nto reflect reality following the political unrest in May which
\nled to the resignation of former president Soeharto.<\/p>\n
Coordinating Minister for Economy, Finance and Industry
\nGinandjar Kartasasmita, who attended the luncheon, said he was
\noptimistic the IMF would disburse the next $1 billion standby
\nloan facility to Indonesia in July.<\/p>\n
The disbursement was initially scheduled for June 4 but was
\ndelayed following the political turmoil last month.<\/p>\n
Mar'ie<\/p>\n
Separately, former finance minister Mar'ie Muhammad said the
\nIMF must speed up its aid disbursement to Indonesia because the
\ncountry had implemented the sweeping economic reform programs
\nfaster than scheduled.<\/p>\n
\"I strongly urge the IMF and other donor institutions to speed
\nup the disbursement of their aid commitments,\" he told
\njournalists yesterday during a discussion.<\/p>\n
He also said that since most of the reform programs had been
\nagreed and implemented, reviewing the macroeconomic assumption
\nfigures should not take long.<\/p>\n
The IMF promised the country in November that it would
\nprovided $10 billion of the total $43 billion organized to back
\nup the economic reform programs.<\/p>\n
It was initially agreed to disburse the bailout money in $3
\nbillion tranches, to make sure that the country remains committed
\nto the agreed reforms.<\/p>\n
Indonesia received the first installment of $3 billion in
\nNovember, but the second disbursement of $3 billion was delayed
\nand divided into three monthly installments, each amounting to $1
\nbillion, following a failed attempt by the government to
\nimplement the promised reforms. The second $1 billion payment,
\ndue this month, will likely be made only next month.<\/p>\n
Mar'ie said that disbursing $1 billion in the current
\nsituation would not help much in boosting confidence in the
\ncrisis-hit country.<\/p>\n
\"If Indonesia fails to solve its crisis, this will spread to
\nother countries in the region,\" he said.<\/p>\n
Mar'ie said the privatization of 12 state companies became
\nmore important now to raise Rp 15 trillion (US$1.15 billion) to
\nsupport the budget.<\/p>\n
He also said the government must quickly move to raise its
\nnontax revenue, especially the non-budgetary cash-pool managed by
\nministries and state agencies, to help relieve the bleeding state
\nbudget.<\/p>\n
Although he declined to disclose the total figure of the
\nnontax revenue, Mar'ie said: \"Believe me, it is quite large.\"<\/p>\n
Although the cash pool was still being audited by the state
\ncomptroller agency (BPKP), Mar'ie said, it would be best if the
\nmoney could be directly used to finance the current budget.<\/p>\n
To satisfy the agreement with the IMF, the non-budgetary funds
\nhave to be aligned in the budget to make sure of the transparent
\nuse of the money.<\/p>\n
The non-budgetary cash-pool includes the so-called
\nreforestation fund and the state social security fund.<\/p>\n
The reforestation fund, introduced by former president
\nSoeharto in 1990, has been collected from forest concessionaires.
\nThe use and the amount of the fund, however, is not made public.<\/p>\n
Between 1996 and 1997 alone, more than Rp 2 trillion was
\ncollected, while for the 1998\/1999 fiscal year, the target is Rp
\n1.6 trillion.<\/p>\n
The state social security fund, managed by the Ministry of
\nManpower, is similarly untransparent. The total amount is
\nbelieved to be more than Rp 6 trillion. (rei\/prb)<\/p>",
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